Making jewelry in India is no easy task. There is no simple continuous process solution where the raw materials could be churned and moulded into the final product as it happens in the case of manufacturing beauty soap! The jewelry product development begins from the mind and goes up to the market for every SKU. It's by no means anyone could be replicating and reproducing a successful formula in large numbers and distribute them too! Every piece of jewelry is a creation by itself, birthed in the mind of the designer crafted skillfully putting together and setting those many elements of the design to finally bring out the masterpiece in every product manufactured. The manufacturing process involves very skilled labour end to end – right from conceptualization of a design by a designer to the artisans who skillfully craft the product. One would realize that these skilled artisans cannot be outsourced every now and then like how labor is outsourced on contract in many industries. Even though multifarious technology applications are available today, most of the steps in the jewelry manufacturing process are carried out manually to get the artistic finesse. It takes a good deal of time, energy and the involvement of such skilled labour to craft a single piece of jewelry.
The jewelry retail sector in India has come a long way. For a long time the sector was unorganized and today many retailers are registered under VAT and they issue proper bills for every sales transaction. State governments took the initiative to help the sector with very low taxation so that the industry could enjoy the results of simplified tax regime. GJEPC is seeking the implementation of the presumptive tax as recommended by the Sivaraman Committee in 2006 appointed by the then Finance Minister, P. Chidambaram, which the government has not implemented. The sector now seeks a Presumptive Tax regime, which if implemented will put an end to many conflicts resulting in litigation and high cost of income tax collection too. According to GJEPC, countries like Belgium and Israel who faced such challenges of tax collections have benefitted by the implementation of the presumptive tax regime. It is strongly believed that if Sivaraman Committee’s recommendations are implemented by introducing the presumptive tax system, it would encourage more investment in the sector besides enabling voluntary compliance that would increase tax revenues to the exchequer. Further, GJEPC believes that the industry will be able to compete with global manufacturers and India can become a significant jewelry trading hub. The prospect for growth of diamond studded jewelry being high, the industry should be allowed to import diamonds on consignment trading terms from mining sources like De Beers.
Branded jewelry in India is becoming popular fast. The young and the working women in India have a fetish for branded jewelry and the category attracts 1% excise duty and this too needs to be rolled back. Most of the branded jewelry in India is sold through the modern retail sector. The withdrawal of the excise duty will go a long way to promote branded jewelry in retail.
One would like to see as many transparent organizations as possible in this burgeoning sector. We can see from the sales growth trajectory of a very few organized players in the precious jewelry retail sector in India what TRUST and TRANSPARENCY can do to their business! It's time for the government to help the sector grow and help consumers at large, too!
- Dr. Gibson G. Vedamani
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